What Asteroid Mining Means for Precious Metals

asteroid-miningWhat does asteroid mining and flooding the world’s supply of precious metals mean economically? What would that mean for the world and for you?

For many people the idea of mining asteroids is the stuff of science fiction. Most people roll their eyes at me when I talk about our ability to make this fantasy a reality.

I’m here to tell you, asteroid mining is not far away. There are a number of ideas on how to accomplish it, but one of the easiest is simply changing the velocity of small asteroids so they enter into Earth’s orbit. From there break them down aboard a space platform and drop the material to the surface.

Getting the mining platform built would be a task but once it was done there would be an endless series of asteroids floating gently in to be processed. Asteroids as small as ten meters across generally contain more than one-hundred pounds of gold and seven-hundred tons of other useful metals. Larger and more metal rich asteroids have far more. To put this in perspective; the total amount of gold mined from our planet is about 152,000 tons.

When asteroid mining becomes a reality, there are economic issues to consider. We often consider things precious, or valuable, simply because they are scarce; not because of their value in industry. Platinum is scarce and used in industry primarily for emission control on vehicles. It’s very possible that we will not need catalytic converters on modern cars. At that point, the value of platinum is reduced dramatically. Couple this with the fact an asteroid as small as one kilometer in size might be mined for more platinum than currently exists on Earth. Suddenly platinum is all but valueless.

Gold certainly has value in industry but also largely for artistic endeavors. The things we consider valuable today will be super-abundant tomorrow, and thus have little value. This has happened before. There was time when aluminum was more valuable than gold. Aluminum has incredible value in the industrial world. Luckily it is readily available on Earth so scarcity is not an issue, although I’m guessing it will be a target of asteroid mining as well.

Basically gold, platinum, silver, and other metals we associate with monetary policies will become super-abundant. This means every person who invested in such metals will lose their money. This also infers that any country basing their economic system on precious metals will instantly become bankrupt. Their savings will be worthless as the price of gold plummets.

The economics of the world are changing and it’s wise to be prepared for such events. Gold, platinum, silver, nickel, cobalt, rhodium, and other rare and useful metals aren’t going to be readily available immediately, but there is no doubt in my mind they will eventually become so.

Someday there will be mining bases embedded in the asteroid belt that will ship billions of tons of useful elements to Earth for processing. Scarcity is no longer an issue.

I’m not saying sell all your gold and platinum today. I am saying, if you’re a gold bug or hung up on precious metals, you need to consider what’s happening in the world and off it, and plan your future accordingly.

Tom Liberman

Bill O’Reilly and why Money Matters

bill-oreillyThe slow unraveling of the career of Bill O’Reilly has an important lesson for everyone. Money matters. At least that’s the angle I’d like to examine.

O’Reilly made a lot of money for a great many people including himself. O’Reilly’s top rated show generated enormous income for Fox News but also for the advertisers. They weren’t spending tens of millions on his show for no reason. Everyone who worked at Fox and far beyond benefited from the ripple effect of his money printing machine. Camera operators, commercial actors, executives, other personalities at Fox, the list is almost endless.

That’s why it took so long for Fox to finally fire O’Reilly. Imagine O’Reilly was a simple camera operator. How many incidents with women would it have taken for him to get fired? I think we all know the answer to that one. How many people would have risen up in support of O’Reilly under those circumstances? Again, we all know the answer to this question.

We can lament this situation all we want. We can complain about the extra chances someone in O’Reilly’s position gets, the opportunities many others would not, but reality must be considered. Someone who is generating huge amounts of money will almost universally get the benefit of any doubt and even be allowed to continue long past the point of uncertainty.

I think it can be argued that simply being in the position O’Reilly was in encourages the sort of behavior in which he engaged. If you are immediately punished for wayward behavior then you just don’t get an opportunity to repeat it, you’ve been fired.

There are lessons to be learned for those who have a pragmatic mind. Sure, the ideologically motivated will attempt to lay blame on one group or the other but that’s really beyond the point. The reality is people who generate a lot of revenue are going to get more chances than those who do not.

If someone in a position of power does something reprehensible to you, you might want to seek financial rewards rather than taking the high ground. No matter your principles, the person who wronged you is going to avoid consequences, at least for a while, until multiple allegations begin to pile up.

Certainly, you should report the situation to whatever authority you can but if nothing is being done about it, you must be a pragmatist. Get out of there as quickly as your legs can carry you, like Megyn Kelly. The old adage about life giving you lemons has validity in today’s world.
There are people like O’Reilly everywhere in this world and they often crush those who get in their way. They don’t hesitate to use their wealth and power to get away with many terrible things. That’s the lesson. Don’t let yourself be crushed. Understand that life is extraordinarily unfair. That many times you’ll be in the right but won’t be rewarded for it, you might even be punished.

The final lesson to consider is your own behavior. If you find yourself in a position of power, a place where you are allowed to get away with things, don’t do it. Take the high road, you’re the only one with the option to do so.

Tom Liberman

If you Like Sports you’re not a Capitalist

capitalist-sportsI’m a Libertarian and there is not much about socialism I find enticing as a political philosophy. I also like football. Finally, I’m a realist. Sports organizations exist today almost completely as a conglomerate of policies that can only be described as socialistic and communistic.

Drafts are one of the most anti-capitalistic entities that exist in the western world. Imagine if young college students were drafted upon graduation by a particular corporate entity, their salary was predetermined by some equation, and they were unable to negotiate with anyone else. Should they choose not to sign with the company that drafted them, they could not sell their skills elsewhere for one full year, upon conclusion of which they were back in the same situation, hoping to be drafted by a company for whom they wanted to work. Yikes.

The process young high school students endure is slightly better. They can at least choose which college to whom they sell their services. However, once that letter of commitment is signed, it’s a different story. They are largely stuck. If they want to leave, their boss must approve of the school they transfer to and even then, they must sit out for a full year. And, of course, they can’t negotiate their salary.

Everyone on the team earns exactly the same amount. From the star quarterback to the third string strong safety, not that I’m picking on safeties, they all get room, board, and tuition. That, dear readers, is communism.

The amount of money each team in the NFL, NBA, and NHL is allowed to spend on salary is strictly controlled by rules. No one can spend as much as they want, each team is limited to the same value. This means each player gets remunerated at a rate that fits into a predetermined structure rather than a fully capitalistic system.

A portion of the total amount of money each team earns over the course of the season is subject to division and split among all the teams in the league equally.

Can you imagine such a system anywhere except sports? The thought is horrifying, but we accept it without thought when it comes to the various leagues. The structure is different from league to league but it is fairly similar from one to the next.

The alternative is to treat athletes like everyone else. Every school and team can offer whatever incentives they want to each player. You’re a star eight-grade basketball player? Perhaps a top school in another state wants you. Maybe they’ll move your family to a nearby home and pay you. How is that bad for the athlete?

At the end of the college season each player is free to negotiate with every professional team and arrive at a contract that is acceptable to all parties. How can that be bad for the players?

Yes, the wealthy high schools, colleges, and professional teams will get all the best athletes. That’s how a business succeeds in this world, they get the most talented players.

We must consider personal gain as well. The second-best running back would almost certainly sign with a different team than the best running back for the opportunity to play more. Teams would have to manage their expenditures within their economic means.

I have no illusions that such a system will ever be implemented for athletics across the country. I don’t deny that almost everyone reading this will call me an idiot, and they won’t hesitate to tell me why. However, in addition to being a Libertarian, I’m a dreamer. Maybe one day we’ll have a system designed to benefit the individual. That’s my dream at least.

Tom Liberman

Trouble at America’s Malls so we Blame Who?

malls-closingNewsflash! American brick and mortar retail stores are closing in record numbers. What sort of genius do you have to be to figure out why? Not much of one. Total sales aren’t going down, just sales in such stores. More and more people, me included, are purchasing online.

Yet every time I read an article in one business publication or another about how malls are losing their anchor stores and closing down in record numbers, the comment section is filled with tirades about President Obama or President Trump. Filled. I’m not willing to start counting comments and tell you what percentage want to lay blame on one of the two major political parties. Nor will I bother figuring out how many rational people explain there is no blame to be laid, it is simply an example of changing market environments.

This is what happens. This is why buggy whips, to use the example from the hidden gem Other People’s Money, are no longer manufactured in large numbers. This is economics. This is capitalism. While many people benefit from this there are, and always will be, losers. The people who lose their jobs in the malls. The companies that go out of business.

In the end capitalism will benefit the majority of us. We get a product at the price we want without having to leave the comfort of our Tom Pagnozzi locker room chair given to me as a gift many moons ago. I love this chair but that’s beside the point.

It’s obvious why malls are closing. Everyone knows the root cause. It’s not rocket science. I don’t believe people are so stupid as to think political policy is driving this trend. I think their motivation is to convince someone else to further their political agenda.

What can we do about this? You certainly can’t argue someone out of their position on this because they really don’t believe it anyway. You can call them stupid if you want but that’s not really helping matters. You can certainly ignore them and that’s largely what I do. I think often times that’s the best strategy. Don’t get into a pointless debate. Don’t call them idiots. Don’t get enraged. Simply ignore them.

The other possibility is to do what I’m attempting to do here. Plainly, clearly, logically, and without malice lay out some facts. After that it’s just not your responsibility any more. You can’t think for other people, speak for anyone else, or act for anyone else. Do what is in your power to do.

The world would be a better place if we all could ignore provocation and follow the excellent advice of the Hitchiker’s Guide to the Galaxy. Don’t Panic.

Tom Liberman
Sword and Sorcery fantasy all About Freedom

Mexico, USA, Cars, and the Complexity of the Protectionist

protectionismThe recent election in the United States brought an avowed Protectionist to power and this raises interesting and complex economic questions. As a Libertarian I’m opposed to such policies.

I will not pretend that economics is a simple or easy to understand discipline. Nor do I even hope to convince those who agree with a protectionist agenda. I only hope to show you the situation is more difficult to understand than you might think.

At issue is the manufacturing of cars in Mexico. In the last twenty years building small cars in the United States has become an unprofitable business. When NAFTA was passed protectionism in North America was largely abolished. If you produced your goods in Mexico, Canada, or the United States then other countries are forbidden protectionist policies like tariffs, taxes, or other means. Free trade. If you can produce something more cheaply than the people in a neighboring country then you were allowed unfettered access to that market.

This means economic hardship for some and prosperity for others. If making a car in the United States cost X and making the same car in Mexico cost Y then manufacturers have a decision to make. In the last twenty years that decision was largely to move facilities to Mexico for production of small cars. The vagaries of economics made manufacturing them in the United States less or not at all profitable. This meant the loss of certain jobs. And that’s what Protectionists talk about the most. Yes, there is a loss of jobs.

However, let’s examine the likely outcome if the United States propped up the manufacturing of small cars through tariffs and other protectionist ideas. Japan and other car making nations would have gone to Mexico, as they have done and continue to do. They would then have been able to offer cars at a significantly better price than the U.S. companies could match. The only way to save those jobs would be for the U.S. to provide increasingly aggressive tariffs or to cut wages dramatically. Thus people in this country would be paying far more for cars or earning less, all to support jobs. That’s reality. That’s the inevitable outcome of protectionism.

Protectionists paint jobs going to Mexico and businesses moving plants to Mexico as a terrible thing. As stealing jobs from U.S. citizens. Movement of manufacturing to where it is best performed certainly saves consumers money but in the long run saves jobs as well. The jobs supposedly saved through protectionism come at a terrible cost and only delay the inevitable.

Imagine Protectionism comes to rule the day in the United States. Manufacturing comes back to the United States. What will be the result?

You will pay more for the same car until propping up the difference in price becomes unsustainable and the plant goes out of business anyway. The United States will produce goods at a higher price than everyone else in the world, meaning only we will purchase such products. Our global competitors will slowly take all our markets and in the meantime we’ll be paying more for everything. Businesses will eventually go bankrupt in increasing numbers and job losses and unemployment will rise as an inevitable result.

All to artificially preserve unsustainable jobs.

Protectionists wail about how manufacturing is going to other countries but the reality is the number one employer in the United States, besides the government, is Wal-Mart. They employ nearly six times more than the runner-up, McDonald’s. The main reason? Manufacturing performed in China. When Ford and Chrysler move plants to Mexico it actually creates wealth in this country. It creates jobs. Just different ones.

Protectionism has an allure. Be aware of the long-term dangers it presents.

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Ideology
Current Release: The Gray Horn
Next Release: For the Gray

My Goal is 100% Unemployment

unemployment-is-goodYep. That’s the world I want to live in. A world where no one has to work.

Now it’s important to define what I mean by work. Work is what we do to make money. Not labor we perform. I’m a big believer in doing things, achieving things, building things, and general accomplishment. I think those are the things that make us happy. That being said; I think the general idea of unemployment is completely backwards. Economists, real ones and the armchair version that posts on Facebook and comments sections of news articles, are all wrong. Completely and totally wrong.

100% unemployment is the goal we need to seek, not 5% or whatever economists call healthy. We need machines to do all the work. We should be thrilled when they take away our jobs.

Imagine a world in which machines do all the labor and people are free to do as they please, that you have eighteen hours a day to be with your family, to be with your friends, to pursue your hobbies. What would you do? Work? No. Achieve at a never before seen level? Yes.

Again, it’s important to distinguish the idea of work from the idea of accomplishment. If I didn’t have to work I wouldn’t sit idly eating food. I’d go to the gym more often. I’d write more novels. I’d play more video games. I’d play more Dungeon and Dragons with my friends.

The question on your lips is one with which I’m familiar. Who would make the video games? Who would get the food?

It would be a combination of automated robots and people who like doing those things. There are many tens of thousands of people out there working on video game projects because they enjoy it. They release them as Open Source Freeware. Just as my novels would be free for all to enjoy. Farmers largely enjoy their labors. They love growing the food and knowing it is feeding people. It gives them great fulfillment, as well it should. Sure robots would do a lot of that but there are plenty of people in this world who love  doing things. Not necessarily working but achieving.

When people are free to achieve all day long why would you imagine productivity would go down? I’m going to write about the End of Money tomorrow but for the moment imagine you don’t have to make money to survive. Would you just sit around all day doing nothing? Perhaps a few among us would do so but I think the vast majority would use that free time to pursue productive ends. They would learn new languages, gather with friends to make music, improve their bodies and minds.

Imagine a world with 100% unemployment. I do.

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Ideology
Current Release: The Gray Horn
Next Release: For the Gray

Zack Hample and the Baseball Game at Fort Bragg

Fort-Bragg-BaseballThere are a lot of people angry at a man named Zack Hample this morning because he attended a baseball game held at Fort Bragg.

The game was held on July 3rd as a tribute to military personnel and they and their families were given tickets. Hample is an avid, to understate it, collector of baseballs. He’s traveled all over the United States and collected over 9,000 of them from various different stadiums. He was eager to get a ball from this unique event and presumably paid someone to get their ticket. He was offering $1,000 for such a ticket.

People are angry that Hample got a ticket, attended the game, and collected a ball. They argue that he “stole” the seat from a military person and thus the ball as well.

I disagree. Whoever sold their ticket to Hample got something more valuable than a souvenir, $1,000 presumably. We don’t know what Hample ended up paying but we do know that whomever sold him the ticket wasn’t much interested in baseball or the souvenir. I understand that there was a child somewhere who is interested in baseball and would have loved to get a ball. But there was also someone interested in a thousand bucks.

No one forced the soldier to sell his ticket. From reading the comments on Twitter the soldiers were told not to give or sell the tickets to anyone except active duty military personnel and family. Yeah, good luck with that. There are going to be plenty of soldiers who got tickets who have no interest in baseball. There are going to be plenty of them, like me, who have no interest in souvenirs. They should be able to sell their ticket to the highest bidder. I’m willing to bet that many soldiers will sell tickets and other items they got at the game. That’s their business.

That’s life.

I certainly understand people don’t like it. I’m just suggesting that such people are living in a fantasy world.

Hample wanted a ball and was willing to pay for the opportunity to get one. A soldier wasn’t much interested in a ball or the game and sold him the seat. Two adults completing a transaction.

Was there anything wrong with Hample attending the game and getting a ball?

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Tom Liberman
Sword and Sorcery fantasy with a Libertarian Ideology
Current Release: The Gray Horn
Next Release: For the Gray

The Student Athlete Compared to the Student

student-athlete-payThere is a profound difference in the nature of a so-called student-athlete and a student and I think many people fail to realize it. Why does this come to mind? Because a fellow named Don Yee, who happens to be the agent of Tom Brady, wrote an opinion piece over the weekend suggesting, among other things, that Clemson and Alabama college football players should refuse to play in the National Championship game.

It’s an interesting piece and talks about the inequality of the financial situation between players and virtually everyone else. I wrote a blog on the same subject back in June of 2013 that echoes a number of the points Yee makes. Yee focuses on race and I largely disagree with his assessments in that regard but it’s not the topic of my blog today.

While reading the passionate comments under Yee’s post I found a common thread. The idea is that the student-athletes should be more than happy with the opportunity to attend college without cost. The students would very much like this arrangement for themselves.

People equate the student and the student-athlete to make this argument. Gosh, lots of kids go way into debt to pay for college is the common thought. The reality is that the two are virtually the opposite of one another in an economic sense.

The student is paying a fee for an education. He or she must get good grades to be allowed into the school and even then pays for the commodity of an education. The school charges this fee and then provides teachers, buildings, cleaning staff, and many other items in return. The student is the consumer and the college is the commodity.

On the other hand, the student-athlete is being paid to play football. The school is the consumer and the player is the commodity. The school’s representative all but begs the athlete to come to that school rather than sell his services to a rival. The player then provides entertainment that generates a large amount of revenue for the school, coaches, and many others. The payment the player gets is an education, exposure for a future career, and various other things.

These are fundamentally different. We cannot compare the student with the student-athlete because they are essentially opposites of one another from an economic perspective.

In the meantime, the student-athlete has noted that coaches are getting paid a lot more than they were twenty years ago. The student-athlete has noted the total amount of revenue generated from the games has gone up by a tremendous amount but their salary remains the same. They want a raise and who are we to tell them they should be “satisfied” with their current rate of pay? That they are “greedy” for wanting more? Would you tell a co-worker those things? Of course not.

Should they get a raise? That’s not my business. It’s between the schools and the student-athletes but I certainly think it’s their absolute right to ask for a raise and not perform if they don’t get. Likewise the school might fire them and give the scholarship to someone else. That’s a labor negotiation which is exactly what is happening.

On a happy note, things are actually moving toward a much more equitable state. The student-athletes in the Power Five conferences now receive a stipend of several hundred dollars a month, access to as much food as they can eat, and their families no longer have to pay out of pocket to attend Bowl Games (trips which can be quite expensive, particularly for low-income households). The horrific system where scholarships were revoked if a player got injured or failed to perform has been abolished.

The NCAA and the colleges seem to have recognized the inequities that the system engendered and are working to fix them without going to a purely professional system wherein each player is negotiated with separately.  These are good things. A reasonable pay increase for the players without destroying the nature of the system. A win/win.

It makes an old cynic proud.

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Ideology
Current Release: The Girl in Glass I: Apparition
Next Release: The Gray Horn

 

What is the Work Week?

standard work weekThere have been a number of stories in the news this week about something called the Work Week.

We had Jeb Bush suggesting that people need to work more (he “clarified” suggesting he meant part-time workers need full-time jobs, but honestly, that’s not what he meant). A number of people are advocating reducing the Work Week to 32 hours.

The problem seems to me that there is a total disconnect between what the work week means and what people think it means. I aim to rectify that.

The Work Week in the United States is generally defined as Monday to Friday from 8:00 a.m. to 5:00 p.m. with an hour for lunch. There are many permutations but largely the perception is that people work 40 hours a week at their jobs.

This is, of course, absolute bollocks! There continue to be a number of jobs where people work while at their office and leave work behind when they leave. These sorts of jobs a becoming an increasingly smaller part of the whole. With our phones, tablets, home computers, and other technologies we work wherever and whenever work needs to be done. The idea of a standard work week is utter nonsense for a growing number of people in the United States and other countries in this Information Age.

One of the metrics by which we measure how much work is done is called Workforce Productivity. The problem is that hours worked no longer has meaning in the equation. That hasn’t stopped people from trying to use that particular equation to calculate how productive we are. Productivity goes into many other economic equations defining the health of a nation. If one of the key measurements is no longer valid then I wonder about the entire equation. Are economic decisions being made at the highest levels of government and business that have no basis in reality? In my opinion, yes.

The reality is that people who work in Information Age jobs work far more than they report working. They are on their phones working for ten minutes here and ten minutes there. They are not in the office but they are working. While it’s possible people over-report time away from the office working I’m of the opinion that most people under-report and by a fairly significant amount. This throws all productivity measurements into disarray.

If we want to get a true indication of productivity we must accept this new paradigm for workers.

If we continue to follow outdated and mathematically flawed models we can only make bad decisions.

The idea of the Work Week is dying and we must accept that. Work can be done from anywhere, anytime.

Do your Over Report or Under Report your Working Hours?

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Tom Liberman
Sword and Sorcery fantasy with a Libertarian Ideology
Current Release: The Black Sphere
Next Release: The Girl in Glass I: Apparition – Release date: late August 2015

Immigration Reform – Robot Style

Grape Picking RobotI just read a fascinating article about how a new generation of robots is being created to harvest the food we eat. There are actually a couple of reasons that I find the article so interesting. For one, I’m a total nerd and robot articles always attract my attention. The second is the economic factors that are driving this robot revolution.

First let’s take a quick stroll down history lane and then I’ll wax poetic about what this new generation of agricultural robots promises us and why it is something to be welcomed, not feared.

Robots have changed the nature of work in developed countries. There is no doubt this is true. Early in the era of mechanical labor the term Technological Unemployment began to make its way throughout literature largely promulgated by people called Luddites. The idea was that robots and machines would take labor away from people leading to massive unemployment.

This didn’t happen. What happened is that horrible, nasty, low-paying, dangerous, and boring jobs that nobody wanted to do anyway were eliminated. In the information age we have elite, intelligent, well-trained, and well-paid workers capable of contributing to business growth. This is not a good thing, this is a great thing. This, naturally, requires an elite and educated workforce. Thus people who are not educated risk losing their livelihoods and this is a problem that I discussed in two other posts about the Shrinking Middle Class and the Broken Social Contract.

What I want to discuss today is the connection between cheap, abundantly available labor and wealth. When industry can employ a large number of people at an extremely low wage it is not good for society. It appears good for the business owners but the reality is that people who have little or no hope for economic advancement drain society in a number of ways. They largely pay no taxes, require government subsidies, have way too many babies, and commit most of the crimes.

The United States until recently had a huge surplus of migrant farm workers. Food producing companies employed them often at below legal wages and had no need for innovative robots that could save time and money. A couple of factors changed this. The economic down-turn and stiffer laws against illegal immigration resulted in fewer workers being available to harvest our crops.

The result is an explosion of innovation in produce picking equipment that can do the job more quickly, better, cleaner, more safely, and cheaper than workers. This technology has been long stifled because of cheap labor. People doing backbreaking jobs for minimal wages. The robots aren’t quite ready yet; machines have difficulty picking ripe fruit, avoiding bruising, and otherwise replacing people but change is coming.

My father tells the story of the summer in St. Louis he was a weeder at the Forest Park Golf Course. Basically he went out and picked weeds. If we could still get away with paying hoards of kids almost nothing to do a miserable job then they would still be out there. It’s good that we have machines to do it for us. Good for kids who now get a better job at a better wage during their summer vacations and good for employers in that the weeding gets done more efficiently and cheaper, and good for society in that people have more disposable income.

Cheap labor is bad for everyone. If people aren’t forced to find a better way, they often don’t. The world is changing. The information age is just beginning. There is a bright future for humanity awaiting us. A future where educated people actively take part in their line of work contributing not just in menial ways. A future where productivity occurs at a phenomenal rate, where every employee is well paid and happy. Where we go home at the end of the day having accomplished something and we feel good about that. Where robots do all the nasty jobs that no one really wanted, they just did it to feed their families. This is a my vision of the future.

My favorite quote in the original article was from farm workers talking about how bad mechanization will be for consumers: The fundamental question for consumers is who and, now, what do you want picking your food; a machine or a human, who with the proper training and support, can take significant steps to ensure a safer, higher quality product.

My answer? Robots!

Tom Liberman
Sword and Sorcery Fantasy with a Libertarian Twist
Current Release: The Sword of Water ($2.99 for 300+pages of fantasy goodness)
Next Release: The Spear of the Hunt

The Shrinking Middle Class

Middle ClassMy middle younger sister (yes, I have three younger sisters) recently linked an interesting radio show from This American Life on her Facebook page. The topic of the show was the precipitous rise in disability claims in the United States over the last twenty years. It’s an interesting show for a number of reasons. While I somewhat disagree with its conclusions, it did lead me to some interesting thoughts. Here is a summary of what it talks about.

In 1996 the United States passed a sweeping welfare reform act largely at the behest of the newly elected Republican Congress as part of their Contract with America. President Clinton signed it into law. Clinton had vetoed two earlier attempts and with Congressman Newt Gingrich arrived at this compromise bill.

The main focus of the bill was to allow each individual state more leeway in who was allowed to be on welfare and for how long. The state took over some of the funding for welfare although still received much federal money. Largely the bill only allowed people to get welfare if they were actively looking for work and stopped welfare after a period of time, largely five years although this varied by state.

In the early years there was a large reduction in welfare recipients and decrease in the unemployment rate although this was certainly at least somewhat related to the dotcom boom of the time. The radio broadcast points to a direct link between the rise in disability claims of that era and said reductions of welfare. That those leaving welfare took up disability instead.

I took some time to look up a few statistics and I see the point made by the broadcast but I’ve come to a different conclusions. Disability is not necessarily replacing welfare as a place to get free government handouts for doing nothing, although I’m sure there are many who abuse the system. Since 1990 the number of disability claims has been going up, this started six years before the 1996 welfare reform act.

What we see in our country are two trends that both drive people onto disability and increase the wealth gap between those who have sufficient money and those who do not. This gap, this increase in people unable (or unwilling) to work presents real problems for our country. A strong middle-class is vitally important to a strong nation. When the poor have real opportunity to gain wealth we have a fairly equitable society. When they do not, we risk revolution, the possibility of becoming a police state, or both.

I think the rise in disability claims is more closely tied to an increasingly unhealthy population and stupid people. Unhealthy people cannot work. This didn’t used to be true for stupid people. Prior to the last ten years or so there were always plenty of jobs for stupid people. Not the highest paying jobs, but jobs that provided adequate income. Stupid people are seeing their employment opportunities dwindle and are essentially disabled because they cannot work productively in modern society. They can’t do simple jobs because modern jobs, even simple ones, require an education.

As the ability for stupid and the ever-growing number of unhealthy people to get jobs diminishes, the middle class vanishes. This is very dangerous. We have moderately high unemployment but a quick, unscientific survey of my friends indicates their companies would hire more people if they could find qualified people.

There is no effective way to legislate health or study habits. By the way, when I say stupid, I generally mean people who choose not to learn. Not the mentally disabled. I think the vast majority of people could learn simple tech jobs. Not the highest paying jobs, but people would be able to support themselves with this sort of work.

So, what is the solution?

Value education. Value health. That’s the only answer. We cannot make people eat healthy food and study in school. Legal remedies will never work. But, why do Jewish kids generally do well in school? Asian kids? We cannot deny these facts. Why are some people healthy? Why do they exercise? Why do they eat better? I argue that it is because they grew up in a home, in a society, that valued these things.

We can blame Democrats, Republicans, laws, liberals, conservatives, Paris Hilton, McDonald’s, whoever. I don’t think it’s their fault. Our society is raising hordes of people who cannot hold down a job. Let’s look in the mirror. Let’s make some changes.

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Twist
Current Release: The Sword of Water (totally awesome, I might add)
Next Release: The Spear of the Hunt

What Went Wrong in Cyprus?

Cyprus Bank CrisisOne of the biggest financial stories in recent weeks is the bankruptcy of several large banking institutions in Cyprus and the methods needed to bail them out. I don’t want to talk about the methods for solving the financial crisis but analyze the reasons behind it. It’s an interesting case and in the United States you don’t see too many Democrats or Republicans lining up to blame each other, there’s a reason for that.

Cyprus has a long and complex history but the parts that pertain to our story have to do with its politics and economics. Politically it is split between a Turkish faction and a Greek faction dating back to the 1974 when the country reunited after an invasion by Turkey split the region. The Turkish part of the island is allocated seats in the government but refuses to take them because they will not acknowledge a Greek government.

The country is what we would call socialist or liberal in many regards but not in a special few. As of 2002 Cyprus has the lowest corporate tax rate in Europe and is considered very business friendly. It has become a hub for foreign investment because of few restrictions. Many Russians and other eastern tycoons placed huge sums of money in its banking system because of the tax friendly status. Thus it is an odd mix of what people call Conservative and Liberal.

They have also recently had an energy boom thanks to deposits of natural gas found offshore. They have little other than that as a natural resource and derive much of their income from tourism.

So, with all this business friendly, low-tax conservative money policy, why are they bankrupt?

Much of the money that was coming in was given back out in what eventually became bad loans. Thus the banks went bankrupt much as they did in the United States. They also have a public debt of 84% of the GDP which is one way to determine, with modest accuracy, how much they owe. This means despite lots of economic growth prior to 2012, when the crisis hit, they were still in debt.

The reason we don’t see an uproar among conservatives to raiding the savings accounts of citizens to bail out the banks is that a lot of very wealthy people have their money in Cyprus banks and they don’t want to lose it. The reason we don’t see liberals decrying the situation is that even with excellent economic growth a liberal government was still in debt. Neither system worked.

My point here is that the economic system as it stands is unsustainable with any model. We insist on growth with flattening populations and when we don’t get it, make it happen through stimulus packages. We loan money to aid growth and count on being paid back with interest. There is currently so much debt that much of that money will never be repaid. The few countries not in debt will be driven into it because the money they supposedly are owed will not be repaid. If everyone is in debt then no-one can make payments. It’s that simple. There is no money.

I don’t want to devolve into a conversation about how to solve the situation, I just wanted to point out an instructive event currently taking place in Cyprus. If you are a Democrat or a Republican I urge you to look at the situation closely and make a particularly hard examination of the policies you endorse. We must stop bickering over which failed policy we want to pursue, it gets us deeper into trouble.

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Twist
Current Release: The Sword of Water
Next Release: The Spear of the Hunt

Zimbabwe Economic Woes

ZimbabweThere is a lot of chatter about the economic condition of Zimbabwe in the news these days and I think it’s a very interesting situation.

The history of the country is fairly fascinating and plays into those condition. I’m going to go over that quickly before I get onto the pertinent economic issues. Like most African nations prior to the arrival of Europeans it was a tribal state for most of its history. The region was rich in gemstones and a fellow named Cecil Rhodes recognized this and largely created the country. Current day Zimbabwe is a major of diamond exporter and Rhodes, a mining expert, saw that potential. He is also the  founder of the De Beers diamond company.

The country was eventually named Rhodesia in his honor and prospered when Europeans (read whites) immigrated and began both mining and farming in earnest. During what is called the Colonial era these European subdued native (read black) rebellions and forged a self-governing British colony. This colony prospered thanks to both the diamond mines and burgeoning agricultural industry lead by tobacco and cotton. The farming industry once contributed as much as 40% of the country’s exports and was also self-sustaining in the production of maize to feed its own people. However, gemstones were and remain the main economic money-maker in the region.

Eventually the British colony fell under scrutiny for their racial inequalities and sanctions followed. The British themselves, who outlawed slavery long before the United States, were proponents of majority rule rather the status quo of minority rule. The natives eventually waged a war of independence and gained the control of the country in 1979 instituting a relatively equitable system. Whites kept their property and control of the police, civil service, and judiciary while blacks took control of the government. Clashes between enemy tribes then ensued and many blacks were slaughtered by other blacks.

On an economic front there was general despotic rule in which unions were suppressed and socialist government take-over of universities was at least attempted. This mix of socialism with crony capitalism is worth noting. We tend to lump socialists in one camp and capitalists in another but under totalitarian rule the two intermingle quite nicely. A small minority gets rich using monopolistic policies coupled with socialist takeover of industry. A mix of two bad policies leading to … disaster.

The totalitarian regime seized farmland from prosperous white farmers who controlled about 70% of the arable land despite policies designed to encourage blacks to purchase that land. This redistribution failed miserable, as might be predicted. Without experienced farmers, capital outlays, and a long-term strategy the farming community collapses. A drought didn’t help.

Meanwhile the powerful regime grew rich off the gemstone mines virtually enslaving the population. Western horror at the conditions in the mines resulted in sanctions driving the country further in bankruptcy. Hyperinflation like that in Germany after World War I plagued the country and they even created a one trillion note at one point.

Elections remain largely fraudulent. Disease, mainly AIDS, is rampant and life expectancy is currently 39 years, the lowest in the world.

There are some encouraging signs for the country but the despotic regime continues.

What’s the lesson in all this? If you read my blog frequently you know the answer. Let the best succeed. Reward achievement. If the early white settlers had been fair-minded objectivist instead of vicious racists then blacks might have joined in the economic boom times and the wealth of the country naturally distributed to those most capable. If the blacks who came to power had been fair-minded objectivist they would have rewarded those whites who stayed and worked hard it would have resulted in equitable wealth distribution and a prosperous nation.

Instead, racism, greed, and hate won. That’s what those three things will get you. Disaster. Every time.

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Twist
Current Release: The Sword of Water
Next Release: The Spear of the Hunt

Avoiding the Fiscal Cliff – Booo!

Fiscal CliffI’m probably the lone-voice who is opposed to stopping the so-called “Fiscal Cliff” of 2013. Yep, I want to go over the fiscal cliff.

For an exhaustive understanding of the ramifications of both stopping and allowing the fiscal cliff to occur I’d highly recommend the Wikipedia article. It’s complex, long, and not easy to process. I’m going to try to summarize why I think going over the fiscal cliff is the better choice but please read the article and come to your own conclusion.

First a quick understanding of what the fiscal cliff entails. Basically, if the US doesn’t extend the debt ceiling then, by law, a series of automatic budget cuts take place along with the end of various tax-relief schemes. These budget cuts and tax-relief abatements are projected to reduce the current level of federal debt by 50% in one year. That is not enough. Even with the automatic cuts we will continue our debt spiral just at a substantially reduced rate. On the other hand, if we avoid the fiscal cliff then we reach 100% of GDP indebtedness in 2021. That means, if there is a resolution to the fiscal cliff, the United States will owe more than the entire GDP of the nation by 2021.

It is argued that we must avoid the fiscal cliff to stop a short-term recession. This is the sort of policy that got us into a debt mess in the first place. It all started when President Reagan came into office during the Stagflation years of the late 1970’s. We started to spend our way out of every potential recession. At that time, when President Carter left office, we were $700 billion in debt. We are now over $15 trillion in debt and, even with the fiscal cliff penalties, will continue to dive more deeply into that state.

The fiscal cliff penalties involve cuts to programs everyone likes. There are cuts to the military, cuts to social programs, cuts to education, cuts to everything. There are more taxes for virtually everyone that currently pays taxes. Either we accept these hardships now or we face nastier ones down the road. One side wants more taxes and the other less spending but neither can stomach both. This nation was founded as a Representative Republic. This form of government works because of compromise. Without an absolute dictator or a super-majority it is impossible to implement dramatic change. That’s intentional. Dramatic, one-sided change is rarely long-term good news for anyone, even those forcing through the legislation.

I’m not suggesting the fiscal cliff ramifications are good news but I’m saying that continuing on our current fiscal path will bring worse consequences down the road. We will eventually face an inability to pay our debt. This will result in all the consequences of going over the fiscal cliff and more. We are simply putting our head in the sand and then patting each other on the back on what a great thing we just did. This is madness.

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Twist
Current Release: The Sword of Water
Next Release: The Spear of the Hunt

Elastic Currency and National Debt

Elastic CurrencySome time ago when I first starting blogging here on WordPress I wrote a post about the Gold Standard. In it I tried to explain the concept in its most simple form. Today I’m going to try to explain the term of Elastic Currency. These two terms are linked together as monetary policy siblings and a thorough understanding of both concepts is a precursor to being able to fully understand the financial problems that face the United States.

As with my Gold Standard article I’m not going to get too technical nor am I going to make too many suggestions as to whether or not this policy is best for the country and the world. I think it’s important to understand the concepts and only after that can people make informed decisions about the financial future of the United States.

The idea of Elastic Currency is that a central banking institute can expand or contract the amount of money available to lending institutions based on economic conditions. This is deemed to be important for two linked reasons. The history of economies throughout the world is a history of boom and bust cycles. These cycles bring tremendous hardships to nations and the goal is to alleviate the pain of these events.

In a boom/bust cycle a particular item becomes attractive to buyers which spurts a speculative interest in those sorts of items. Be it dotCom, Housing, or whatever. Basically people find that they can purchase the product and then sell it later for a profit. This fuels the boom. More and more people purchase the product which drives the prices higher and higher generating further profits and more speculation. The boom “bubble” grows and grows until the product is selling for far more than it is worth. Then, all the people holding the product at the end are bankrupted when people suddenly stop buying. This destroys economies because the people can’t pay back the money they’ve borrowed and the people who loaned the money also go bankrupt. Thus, there is no money to loan others and we enter bust.

The idea behind Elastic Currency is that a central banking institute recognizes a boom cycle is going on and reduces the amount of available currency to loan and tempers the speed and size of the bubble which bursts with far less grave consequences. Likewise, during the ensuing bust cycle the banking institute allows more money to become available for loans thus paving the way for new growth by those who played it safe and did not engage in the boom but would otherwise be shut out by the lack of available loans.

The demise of the Bretton Woods gold standard in 1971 and the rise of Bretton Woods II is clearly linked to the current level of indebtedness that the United States and much of Europe face. Whether there was another, better, solution is unclear.

So, that’s the main idea of Elastic Currency.

I promised not to make too many suggestions as to fixing the rising debt we face but one thing that I think has been ignored by the Federal Reserve and the financial agencies of other countries is that Elastic Currency can and should be contracted at times. It is not merely a tool to fuel growth but also to temper expansion. The other suggestion is that the Federal Reserve’s job to limit the boom/bust cycle is not to eliminate all bust. Moderate bust is good. It weeds out weak players and allows for the growth of new, vigorous entrants into the economy.

I hope this little essay explains some of the concept of Elastic Currency to my legion of followers. I do not pretend it is an exhaustive treatise on the subject and I recommend a perusal of the Wiki articles linked above for a far greater understanding of the process.

Thanks for listening and feel free to comment below either in agreement or disagreement. All are welcome!

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Twist
Current Release: The Hammer of Fire
Upcoming Release: The Sword of Water

Teaser – Science Week – Computers

ScienceYes, amazingly Science Week continues at the behest of my thousands of fans! Tomorrow I take on a subject near and dear to my heart, computers. My personal employment depends on computers and they have changed the world. I’ll look at the early days of computer development and the effect they have on the economy of the United States.

You might learn a few things you didn’t know about men like Bill Gates and Steve Jobs and you will almost certainly gain a new appreciation for a personal hero of mine, Sir Tim Berners-Lee. And let’s not forget everyone’s favorite … Al Gore!

Stay tuned for day four of Science Week!

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Twist

Privacy in the United States – Definition

Privacy
Privacy is a complex issue in the United States. The advent of new technology is changing not only the perceived definition of privacy but also its reality. In this series of blogs I’m going to take on this complex issue and examine how it relates to every citizen of this county and, more generally, to the idea of Libertarianism and free thinking.

As is my want, I’ll start out with the general definition. This is a difficult concept because there is the definition of privacy, the general expectation of privacy, and the actual fact of privacy law in the U.S. Surprisingly, these three things are fairly widely divergent.

First I want to examine simply the concept of privacy. The dictionary seems a good place to start. Sadly, I don’t have a subscription to the magnificent Oxford English Dictionary site but Merriam Webster comes to the rescue.

a. the quality or state of being apart from company or observation

b. freedom from unauthorized intrusion <one’s right to privacy>

I think we are largely talking about definition “b” in this case. Our right to privacy from unauthorized intrusion. The first definition concerns itself more with my individual right to hide in my room typing my blog, writing my latest book, and playing Skyrim.

Now, as to our perception of privacy. An interesting story recently demonstrated that, largely, our sense of what is private does not mesh with reality. I don’t want to get into the details of the story but basically it talks about how our shopping habits, tracked through our credit, debit, and reward cards gives retailers a great deal of information about us.

We think that is private for the simple reason that until the advent of massive database tracking it was impossible for someone to keep track of that much information. Those sorts of databases now exist and combined with identifying tools like reward cards and tracking cookies it is possible for people to not only keep that information but mine it for gain, both yours and theirs.

How does that help me? It helps me everyday when I’m on the computer. Advertisements that interest me show up in my browser, books that correspond to my reading habits show up every time I visit Barnes and Noble or Amazon to check on the rather anemic sales of my books. This sort of targeted advertising will only increase as the technology blooms. When I check in at the grocery story my phone will tell me items on sale that I’ve purchased in the past. When my shirts start to get to be a year or so old  I’ll get an automated message from Brooks Brothers that I need some new ones.

These are the sorts of things we once thought private but are quickly finding out are not. If, say, I purchase an inordinate amount of Bookers Bourbon in a month perhaps I might get a call from an alcoholic center. It’s difficult to say how far this information will go but its safe to say that where there is money to be made the technology will follow.

When you are talking on the cell phone or send an email there is no privacy. That is open line communication and fully non-private. Everything you do on the computer at your workplace, browse the internet, send instant messages to your loved ones, or play solitaire is managed by the Information Technology team at your office. None of it is private.

Every web page you visit is tracked although this is where we start to get into the legal definition of privacy. While certain information is available it is not necessarily admissible in a court of law.

So, as to the legal definition of privacy in the U.S. There are different laws for public and private figures and I’m mostly going to talk about personal privacy for now. Public figures have less privacy than non-public ones for a variety of reasons.

As far as most of us are concerned, privacy laws essentially protect us from someone finding out information about us to either publicly disclose or use for personal gain. Yellow Journalism and the advent of the easily available cameras spurred many new laws in the past and new technologies are changing the landscape almost every day.

To try and wrap up part one I’ll mention the idea of tort law in the U.S. in regards to privacy. There are basically four areas covered and I’d recommend a long perusal of the Wikipedia article for better information.

  1. Intrusion of solitude: physical or electronic intrusion into one’s private quarters.
  2. Public disclosure of private facts: the dissemination of truthful private information which a reasonable person would find objectionable
  3. False light: the publication of facts which place a person in a false light, even though the facts themselves may not be defamatory
  4. Appropriation: the unauthorized use of a person’s name or likeness to obtain some benefits.

Ok, that’s it for part 1. Tomorrow I’m going to try and take on the history of privacy in the U.S. and how technology has, and is, currently changing it.

As always, Like, Stumble, Tweet, Digg, and otherwise share this information if you think someone else might find it of interest. Comment are always welcome!

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Twist

Anti-Trust Legislation

anti-trustAs a Libertarian I’m largely against government interference in the freedom of people to do as they will. There are limits and one of those is anti-trust laws. These laws are put in place to make sure that competition is waged on a level playing field. This is an area, in my opinion, that separates Libertarianism from Anarchism.

In any case, the purpose of this blog is to talk about why anti-trust legislation is needed. To start things off I’ll talk about the definition anti-trust. I’m going to generalize and a full perusal of the anti-trust Wikipedia article and its linked definitions is a worthwhile study.

Anti-trust laws are designed to stop things like collusion and cartel. Collusion is when a group of people agree to limit open competition. It is usually marked by uniform pricing among competing items. A cartel is an open agreement to set prices at a certain threshold.

A second thing they are designed to prevent is market dominance and particularly monopoly. Both of these situations occur when one supplier controls such a large percentage of a particular commodity that they can set a price as they choose rather than being forced to offer a competitive price by competition.

Acquisitions are also under the purvey of these kinds of laws. If one company attempts to purchase all its competitors then monopoly or dominance ensues. Both of those things hurt the consumers ability to get product at a fair price.

There are host of other anti-competitive practices that include things like dumping; wherein a company forces competition out of the market through cheap pricing, refusing to deal; when a group of companies refuse to purchase from a particular vendor to put them out of business, dividing territories; when two or more companies agree not to compete with one another.

In my mind we need anti-trust laws for the same reason we need laws in the first place. It is human nature to take advantage of a situation in any way possible. One of the pro-capitalist arguments is that it caters to human nature and I agree with this but we must also take human nature into account when we make our laws. Anti-trust laws and general regulation hopefully provide a level playing field against unfair practices that hurt capitalism and the consumer.

If we can apply broad regulation that levels the playing field then the business that is operated most efficiently wins. I think it is important for the business community to understand that some regulation is required to prevent unethical people and businesses from dominating the market and putting all the ethical people out of work.

I’m almost finished here but I think I need to explain what I mean by broad regulation. I don’t recommend legislation that takes every possibility into account because that sort of law is doomed to failure. What I mean is more general types of regulation that simply allow each company to play on the same field.

We have laws that make sure manufacturers put the quantity of material in the food container on the package. This regulation is easy to comply with and understand. That’s the goal of all regulation, simple and cheap to implement for the producer, easy to understand for the consumer. It’s not always easy to achieve but I do think it is necessary to allow capitalism and the free market to thrive.

I welcome disagreement as always!

Like, Tweet, Stumble, LinkedIn, and otherwise share if you think this is something that might interest your friends.

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Twist

Teaser – Anti-Trust Laws

Anti-trustAfter my Crony Capitalism post a little while ago several fellow Libertarians posted comments in support but mentioned that they didn’t think the government had the ability to create a level playing field through regulation. That this field was created by competition itself.

Tomorrow I’ll share one group of situations where I think federal oversight, in the way of broad regulations, is sometimes necessary in order to have a free market. Why I think unfettered capitalism doesn’t work without a modicum of government oversight.

I’ve got my bunker all prepared for a blast back from Libertarians!

Stay tuned and see you tomorrow!

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Twist